the function of this Commission be to compute the sum of intrastate rates and prescribe the result as a measure of the interstate rates, actual and direct regulation of interstate commerce by the states would be the result. That in the regulation of interstate commerce by the general government and of intrastate commerce by the state governments there result inconveniences and anomalies, such as is contended to exist here, might be conceded; but such facts, if they exist, neither deprive us of the power nor relieve us from the duty of performing the obligations imposed upon us by laws of Congress authorized by the Constitution of the United States.

"Were we at liberty and inclined to abdicate the authority and abandon the duty imposed upon us by accepting the sum of state rates as a measure of interstate rates, the difficulty would not be removed."

§ 63.

Additional. Powers Given the Interstate Commerce Commission.-Section 15 of the Interstate Commerce Act, added by the Act of June 29, 1906, was amended by the Act of 1910 to enlarge and more definitely state the powers of the Interstate Commerce Commission. The Amendment gives the Commission "on its own initiative" and "in extension of any pending complaint or without any complaint" power over "individual or joint rates" and over "individual or joint classifications." While the phrase "any regulations or practices whatsoever" affecting rates, as contained in the Act of 1906, may have been sufficiently broad to include regulation affecting classifications and joint rates, all possible doubt that may have existed prior to 1910 about the matter has been removed by the Act of that year.

The Transportation Act of 1920, as stated in previous. and subsequent sections herein, further enlarged the jurisdiction and powers of the Interstate Commerce Commission. The most important powers added by this Act are: The power to prescribe minimum as well as maximum rates, to consolidate terminals, to regulate the abandonment and construction of railroad facilities, to permit consolidations of railroad properties, to sanction agreements for the pooling of freight or earnings, to determine the routing of freight, to regulate the distribution and supply of cars, to control the issuance of securities, to entertain, investigate and determine

complaints filed by carriers against intrastate rates, and to safeguard the earning power of the railroads of the country. The latter power, which the United States Supreme Court has stated is the most novel and important feature of the whole Act, was added as Section 15a of the Interstate Commerce Act. $ 64. Effect of Sections 13 and 15a of Interstate Commerce Act on the Right of States to Regulate Intrastate Commerce. -In Section 4, ante, Section 15a of the Act was analyzed and discussed with reference to its effect upon the regulation of interstate commerce. But it has another significance. When coupled up with other provisions of the Act, particularly Section 13, as amended, it has an important bearing on the regulation of intrastate rates by state authorities.

Prior to 1920, railroads could not maintain, before the Interstate Commerce Commission, a complaint under Section 3the discrimination section of the Act against intrastate rates,366 although it had been held in the Shreveport case that injured shippers could do so. The Transportation Act of 1920, however, so amended Section 13 of the Act to Regulate Commerce as to permit, in specific terms, the railroads to file complaints against intrastate rates on the ground of unjust discrimination against, or undue prejudice to, interstate shippers or interstate commerce, and authorized and empowered the Interstate Commerce Commission to hear and determine such complaints. This has resulted in giving the Interstate Commerce Commission greater control over intrastate rates with a corresponding limitation and restriction upon the rights of the states in such matters.

One of the first tests of this new and enlarged power of the Interstate Commerce Commission came before the United States Supreme Court in the Wisconsin case.367

Section 13 of the Act is primarily a procedural section, but,

366 The failure of the original Act to confer authority upon carriers to file such complaints themselves was considered to be in harmony with the principle announced by the Supreme Court in Arkadelphia Milling Co. v. St. L.-S. W. Ry. Co., 249 U. S. 134,

63 L. Ed. 517, 39 Sup. Ct. 237, and the cases cited in the first paragraph of p. 149 of the official edition of the report in said case.

367 Railroad Commission of Wisconsin v. C. B. & Q. R. R. Co., 257 U. S. 563, 66 L. Ed. 371, 42 Sup. Ct. 232.

when amended by the Transportation Act of 1920, it was made to prohibit, in respect to rules, regulations, classifications and practices affecting rates, "any undue or unreasonable advantage, preference, or prejudice as between persons or localities in intrastate commerce on the one hand and interstate or foreign commerce on the other hand, or any undue, unreasonable or unjust discrimination against interstate or foreign commerce."

It was contended, in the Wisconsin case, by counsel for the State of Wisconsin that the phrase, "or any undue, unreasonable or unjust discrimination against interstate or foreign commerce," as contained in Section 13, as amended, or a similar expression, was often used in previous decisions of the Supreme Court when, as the law then was, it could only mean discrimination as between persons and localities and, therefore, that it should be given the same limited meaning after its addition to Section 13 of the Act. In answer to that argument the Supreme Court said (p. 597 of the official report): "But, here, the general words are used after discriminations against persons and localities have been specifically mentioned. The natural inference is that even if they include what has gone before, they mean something more. When we find that they aptly include a kind of discrimination against interstate commerce which the operation of the new act for the first time makes important and which would seriously obstruct its chief purpose, we cannot ignore their necessary effect."

The court also stated, in referring to the provision discussed in the preceding paragraph, that when read in connection with Section 15a of the Act, "it is impossible to escape the dovetail relation between that provision and the purpose of Section 15a."

The court upheld, in this case, the action of the Interstate Commerce Commission in requiring a horizontal increase in intrastate passenger fares and excess baggage charges to correspond with fares and charges fixed for like interstate service on the ground that such intrastate fares and charges were so low, in their relation to the interstate fares and charges, as to constitute unjust discrimination against, and undue prejudice to, interstate commerce. Such discrimination has been

characterized in common parlance as "revenue discrimination" in order to distinguish it from discriminations between persons and localities forbidden by Section 3 of the Act.

The court was careful to say, in concluding its opinion in the Wisconsin case, that it did not involve the general regulation of intrastate commerce by the federal government. "Action of the Interstate Commerce Commission in this regard," said the court, "should be directed to substantial disparity which operates as a real discrimination against, and obstruction to, interstate commerce, and must leave appropriate discretion to the state authorities to deal with intrastate rates as between themselves on the general level which the Interstate Commerce Commission has found to be fair to interstate commerce."

It is a matter of interest to note that the Supreme Court, in the Wisconsin case, refused to sustain the sweep of the order of the Interstate Commerce Commission on account of discriminations between persons and places alone forbidden by Section 3 and some of the provisions of Section 13 of the Act, but upheld it under the provision of Section 13 forbidding unjust discrimination against interstate or foreign commerce. In a later case,368 the Supreme Court referred to the decision in the Wisconsin case as sustaining the exertion of federal power to correct a relationship in rates when a "State establishes intrastate rates so low that intrastate traffic does not bear its fair share of the cost of service," thus plainly indicating that the sort of discrimination which was responsible for the exercise of the paramount authority of the federal government in this instance was discrimination in revenues. The great difference in revenues as between the level of intrastate fares and charges involved in the Wisconsin case and the level which the Interstate Commerce Commission had previously found to be just and reasonable on interstate commerce was emphasized both by the Supreme Court and by the Interstate Commerce Commission when the matter was before that body.360 Sections 13 and 15a were considered together by both tribunals in their consideration of this case.

368 Colorado v. U. S., 271 U. S. 153, 70 L. Ed. 878, 46 Sup. Ct. 452.

369 Wisconsin Passenger Fares, 59 I. C. C. 391.

It had been made plain by the Supreme Court in previous cases that in order to sustain the exertion of federal power over intrastate rates on account of discrimination between persons and localities, there must be a specific finding, supported by substantial evidence, as to the fact of unjust discrimination, and that the order of the Interstate Commerce Commission removing such discrimination must conform to a "high standard of certainty" and must extend no further than is necessary to correct the unlawful conditions found to exist. 370

§ 65. The Hoch-Smith Resolution.-By Public Resolution No. 46, commonly known as The Hoch-Smith Resolution,371 Congress undertook to establish, for the guidance of the Interstate Commerce Commission, "the true policy in rate making." This resolution has provoked much discussion as to its real meaning and purpose." 372 It is divided into three separate paragraphs. The first declares it to be the true policy in rate-making that, in adjusting freight rates, the Interstate Commerce Commission should consider the conditions which prevail in our several industries at any given time, insofar as it is legally possible to do so, to the end that commodities may freely move.

The second paragraph directs the Interstate Commerce Commission to make a thorough investigation of the rate structure of common carriers subject to the Interstate Commerce Act in order to determine to what extent and in what manner the existing rates and charges may be unjust, unreasonable, unjustly discriminatory, or unduly preferential, and, if the Commission should find the Act to be violated in any such manner, it is directed to order a correction to be made. In making any re-adjustment of rates under this paragraph, the Commission is authorized to consider, among other

370 Houston, East & West Texas Ry. Co. v. U. S., 234 U. S. 342, 58 L. Ed. 1341, 34 Sup. Ct. 833; Am. Exp. Co. v. Caldwell, 244 U. S. 617, 61 L. Ed. 1352, 37 Sup. Ct. 656; Ill. Cent. R. R. Co. v. Pub. Utilities Com. of Ill., 245 U. S. 493, 62 L. Ed. 425, 38 Sup. Ct. 170.

371 43 Stat. 801, 49 U. S. C. A., Sec. 55.

372 See Alldredge on Rate-Making for Common Carriers, Sec. 46, pp. 98-103, incl., and "The Hoch-Smith Resolution" (Wagner).